Sweden's Temporary Boost to ROT Deduction Spurs Construction Industry Growth in 2025

In 2025, the Swedish government temporarily increased the ROT tax deduction for renovation work from 30% to 50% of labor costs, capped at 50,000 kronor, to stimulate the economy and assist the struggling construction sector. This policy, implemented from May through the end of the year, resulted in a remarkable 78% surge in approved ROT deductions compared to the same period in 2024, jumping from 7.4 billion to 13.2 billion kronor. Overall, the year's total approved deductions reached a record 18 billion kronor, nearly doubling the amount recorded when the deduction was decreased to 30% in 2016.

Catharina Elmsäter-Svärd, CEO of Byggföretagen, highlighted the critical role the temporarily increased deduction played in helping local construction companies cope with challenging market conditions by encouraging a shift from new constructions to renovations. However, she warned that reverting to the 30% rate might induce difficulties for the sector once again, particularly given the high bankruptcy rate last year, surpassing 2,000 construction companies—the highest since the 1990s.

Construction firms experienced a rush of customer inquiries in December as the deduction's expiration approached. Tobias Gardebrink, CEO of Provvs, noted intensified demand and maintained optimism for 2026, underscoring increased interest in renovation projects.

The temporary tax relief has thus provided a substantial economic boost to Sweden’s construction industry in 2025, though stakeholders remain cautious about future impacts when the deduction returns to its standard level.